SOFTWARE LICENSE AGREEMENT

This Software License Agreement ("Agreement") is made and entered into this 3rd day of November, 2004, (the "Effective Date") by and between Espial Group Inc., a Canadian corporation with its principal place of business at 200 Elgin Street, Suite 901, Ottawa, Ontario, Canada K2P 1L5, on behalf of itself, and its subsidiaries (hereinafter individually and collectively referred to as "Espial"), and mPhase, Inc. with its principal place of business at 587 Connecticut Avenue, Norwalk, CT 06854-1711("Licensee"). Espial and Licensee are each a "Party", and together are "Parties", to this Agreement.

WHEREAS, Licensee wishes to license certain software and obtain certain services from Espial under the terms and conditions set forth below; and

WHEREAS, Espial wishes to license software, the associated documentation and provide certain services to Licensee under the terms and conditions set forth below.

NOW THEREFORE, the Parties mutually agree as follows:

"Confidential Information" shall mean the terms and conditions of this Agreement and any and all information that is disclosed under this Agreement (i) in oral, written, graphic, machine recognizable, and/or sample form, being clearly designated, labeled or marked as confidential or its equivalent, or (ii) obtained by examination, testing or analysis of any hardware, software or any component part thereof provided by one Party ("Disclosing Party") to another Party ("Receiving Party"). Confidential Information that is disclosed orally shall be identified as confidential at the time of disclosure and confirmed by the Disclosing Party by submitting a written document to the Receiving Party within thirty (30) days after such disclosure. The written document shall contain a summary of the Confidential Information and shall be labeled or marked as confidential or its equivalent. "Confidential Information" includes the Software, business plans, market projections, marketing plans, price data and similar proprietary information of the parties, as well as the terms of this Agreement.

"Development Project" shall mean the software development project undertaken by Licensee employing the Software Development Kit with the assistance of the Professional Services, if any, to create a customized version of the Embedded Software to support the Product.

"Embedded Software" shall mean run-time versions of Espial's proprietary software and Sublicensed Supplier Software (if any) more fully described in Exhibit A, licensed to Licensee hereunder which may, pursuant to this Agreement, be customized pursuant to the Development Project described herein and distributed as an embedded program within Licensee's Products, and shall include documentation and any future versions, improvements, updates, enhancements, modifications or derivative works which may be supplied by Espial as part of Espial's Support Services or Professional Services.

"End User" means a third party licensed to use Licensee's Product.

"End User Agreement" means a written agreement between the Licensee and an End User governing the use of Licensee's Product containing the terms and conditions set forth in Section 3.4 hereto.

"Espial Mark(s)" shall mean the Espial trademark(s) as more fully described in Exhibit C.

"Product(s)" shall mean any and all of Licensee's devices described in Schedule A that operate on the unique combination of operating system ("OS"), central processing unit ("CPU that are specified in Exhibit A and that following modification pursuant to the Development Project, incorporates a customized version of the Embedded Software. Any product or follow-on product with different functionality or which utilizes a different CPU & OS, than those specified in Exhibit A shall be deemed a new or different Product.

"Professional Services" shall mean the technical design, programming and development services provided to Licensee by Espial or its subcontractors in accordance with the Statement of Work, if any, for the purpose of customizing the Embedded Software to operate with the Product.

"Software" shall mean the Software Development Kit and the Embedded Software.

"Software Development Kit" shall mean the Espial proprietary software and the Sublicensed Supplier Software described in Exhibit A and includes any future versions, improvements, Updates, enhancements, modifications or derivative works which may be supplied by Espial in the course of providing Professional Services and/or Support Services.

"Statement of Work" shall mean the mutually agreed list of services, if any, set forth in Exhibit B as may be amended by mutual agreement from time to time, or as otherwise mutually agreed upon by the Parties, that are to be performed by Espial to customize the Embedded Software to operate with the Products.

"Sublicensed Supplier Software" means Supplier Software licensed to Espial under licenses that permit Espial to offer Company sublicenses in such Supplier Software under the terms of this Agreement and the additional terms specified in Exhibit D;

"Supplier Software" means all or any part of the software:

(i) for which all right, title and interest (including all intellectual property rights) are owned by a third party ("Supplier"); and (ii) that in modified or unmodified form is or may be incorporated into, or executed in association with, Espial's proprietary software.

"Support Services" shall mean routine telephonic and e-mail technical support and copies of any Updates that may be released during the period of the Support Services to be provided by Espial to Licensee pursuant to Section 4.

"Updates" shall mean error corrections, bug fixes and such interim releases of the Software as may be officially released by Espial to its customers receiving support services similar to or identical to the Support Services.

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2.1 In the event the parties agree to implement a Statement of Work, the terms and conditions of this Section 2 shall apply to all Professional Services provided hereunder.

2.2. Espial will use commercially reasonable efforts to provide all Professional Services according to the Statement of Work.

2.3. Licensee will make available at its own expense computer systems and appropriate personnel to the extent necessary for Espial to perform the Professional Services. Licensee will ensure that any Licensee computer systems will be fully functional, accompanied by complete and accurate user documentation and that Licensee will make technical support available in a timely manner as is reasonably required. The parties agree that any Statement of Work delivery date or work requirement will be adjusted for any delay in performance of the Professional Services that results from failure of Licensee computer systems to perform, inadequate documentation, insufficient technical support or failure to make timely payments under this Agreement and that any costs and expenses incurred as a result of such delay shall be borne by Licensee.

2.4. Espial will invoice Licensee for Professional Services as specified in the Statement of Work.

2.5. Professional Services fees shall be payable by Licensee upon Licensee's receipt of Espial's invoice. If Licensee's procedures require that an invoice be submitted against a purchase order before payment can be made, Licensee will be responsible for issuing such purchase order, but such procedure shall not affect Licensee's obligation to pay an invoice in accordance with Section 5.5. Espial's terms and conditions as provided herein shall apply at all times, notwithstanding subsequent receipt on a purchase order of Licensee's terms and conditions.

2.6. Licensee will pay or reimburse Espial for all reasonable expenses incurred to provide the Professional Services, including, without limitation, expenses related to travel and the acquisition of any hardware or software systems specific to the Development Project.

2.7. All Professional Services shall be provided on a non-exclusive basis.

3.         GRANT OF LICENSE RIGHTS

3.1 Espial hereby grants to Licensee, subject to the terms and conditions contained herein, including but not limited to the payment of all associated fees and the terms and conditions specific to the Sublicensed Supplier Software contained in Exhibit D hereto: (a) a non-exclusive, non-transferable, limited license which may be subject to further limitations specified in Schedule A to have employees use the Software Development Kit for the express purpose of undertaking the Development Project; and (b) a non-exclusive, non-transferable, royalty-bearing, worldwide, limited license to (i) to integrate the Embedded Software into the Products; (ii) to reproduce the Embedded Software as integrated into the Products, and (iii) to distribute the Embedded Software as integrated into the Products solely to End Users who are subject to an End User Agreement.

3.2. Licensee agrees that it will conspicuously display the Espial Mark in the form attached hereto as Exhibit C on each Product in one of the following formats: (i) silk-screened or affixed as a sticker on the Product on the same side of the Product as the Product's main screen display; or (ii) as a screen shot displayed on the Product's screen display during boot. In either case, the minimum dimensions of the Espial Mark as displayed in or on the Product will be 10.1mm wide x 4.2mm high. Licensee may display

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3.3. Espial hereby grants to Licensee a nonexclusive, nontransferable limited license to use, reproduce and display the Espial Mark solely in accordance with Section 3.1(b) and 3.2 above and in connection with the distribution, advertising, marketing and promotion of Licensee's Products incorporating the Embedded Software, provided that appropriate trademark notices are included and the use conforms to Espial's guidelines regarding the use of trademarks, which will be provided at Licensee's request. Licensee agrees that Espial is the sole and exclusive owner of the Espial Mark and all goodwill associated therewith. Except as expressly provided herein, Licensee is granted no right, title or license to, or interest in, any Espial Marks. Licensee agrees not to: (i) challenge Espial's ownership or use of the Espial Marks; (ii) attempt to register any of the Espial Marks, or any mark or logo substantially similar thereto; or (iii) incorporate any Espial Mark into Licensee's own trademarks, product names, services marks, company names, or domain names.

3.4. End User Agreements shall include the following terms and conditions:

4.1. Support Services are for a one-year term and renew annually. The support fee for each of the first two years of the Term is specified in Exhibit A. Licensee may renew Support Services in subsequent years paying the then applicable Support Fee. Espial shall not be obligated to renew Support Services if Licensee has discontinued Support Services in any year. Annual Support shall renew automatically at the then-current fees and policies unless Licensee notifies Espial at least sixty (60) days prior to the expiration of an annual support term of its desire to cancel Support Services for the following year.

4.2. Espial reserves the right to discontinue the Support Services should Espial, in its sole discretion, determine that continued support for any Software is no longer economically practicable and will give Customer at least six (6) months prior written notice of any such discontinuance of Support Services and will refund any unused Support Services fees Licensee may have prepaid with respect to the affected Software. Espial reserves the right to suspend performance of the Support Services if Customer fails to pay any amount that is payable to Espial under the Agreement within thirty (30) days after such amount becomes due.

5.         LICENSE FEES AND PAYMENT TERMS

5.1. The fees and other charges applicable to the Software and/or any services provided by Espial are set out in Exhibit A.

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5.3. All prepaid royalty fees are non-recourse nonrefundable regardless of whether or not the minimum number of copies to which such prepaid royalty fee relates is actually distributed. Prepaid royalty fees are treated as a credit against royalties otherwise payable and therefore upon committing to a specific prepaid royalty, no royalties are payable until the credit of prepaid royalty fees has been consumed.

5.4. Licensee shall pay all shipping charges for materials shipped by Espial under this Agreement, as well as any taxes, duties, licenses, fees or tariffs imposed by any state or other governmental body or agency for storage, licensing, sale, transportation, import, export or use of the Embedded Software and/or Software Development Kit. Espial shall be responsible for all taxes based upon its net income. If Licensee is required by law to withhold income taxes on any payment owed to Espial, then Licensee may deduct such taxes from amounts owed to Espial and shall pay them to the appropriate tax authority, provided that Licensee shall deliver to Espial an official receipt for any taxes withheld and any other documents necessary to enable Espial to claim tax credit.

5.5. All payments under this Agreement shall be made in lawful United States currency, unless otherwise agreed in writing by both parties, within thirty (30) days of Licensee's receipt of Espial's invoice or as otherwise expressly specified herein. All payments not paid when due shall incur interest at a rate equal to a monthly charge of one and one-half percent (1.5%) per month or the maximum allowed by law, whichever is less.

6.         OWNERSHIP OF INTELLECTUAL PROPERTY

6.1. Licensee acknowledges and agrees: (i) that Espial owns or is the rightful licensee of all